On November 27, 2013, the Centers for Medicare & Medicaid Services (CMS) released the Medicare Physician Fee Schedule final rule for calendar year 2014 and related CMS commentary (the Final Rule). In addition to updating payment rates under the Medicare Physician Fee Schedule and the Medicare Clinical Laboratory Fee Schedule, the Final Rule revises various Medicare Part B payment policies. The Final Rule is scheduled to be published in the Federal Register on December 10, 2013, and is available here. Some of the policy changes are noted below.

The Final Rule adds compliance with state law as a condition of payment for “incident to” services. In particular, auxiliary personnel who perform services under physician supervision are required to satisfy licensure and any other state law requirements. In its commentary, CMS noted that some states require satisfaction of certain conditions in some settings, such as accreditation or physical presence, and that Medicare has had only limited recourse when “incident to” services are not furnished in compliance with state law.

Commencing in 2015, CMS will provide separate payment for non-face-to-face Chronic Care Management (CCM) services for patients with multiple chronic conditions. While a number of details have not yet been established, CCM standards are expected to include 24/7 access, plan of care and enhanced communication requirements.

Medicare coverage for telehealth services will expand to include Transitional Care Management (TCM) following discharge from a facility to a community setting. In addition, several technical revisions were made to the originating site criteria for telehealth coverage.

The Final Rule revises physician value-based payment adjustments based on the quality of care as compared to cost. Payments to groups with 100 or more eligible professionals (e.g., physicians, nurse practitioners, physician assistants, therapists, and various other healthcare practitioners) will be subject to both upward and downward adjustments beginning in 2015. The potential downward adjustments will be increased from one percent in 2015 to two percent beginning in 2016. Payments to groups with 10 to 99 eligible professionals will initially be subject to upward (but not downward) value-based payment adjustments beginning in 2016.

The Final Rule revises Physician Quality Reporting System (PQRS) standards for determining incentive payments through 2014 (and reductions in payment, starting in 2015) for reporting data on quality measures. These changes include the addition of new reporting measures and accepting participation in a qualified clinical data registry as a substitute for reporting.

Overpayments in many cases will be subject to repayment for an additional two years due to the extension of the “without fault” period from three years (in the existing regulations) to five years (under the Final Rule). This change is in line with the proposed rule as well as a similar provision in the American Taxpayer Relief Act of 2012, and is therefore not a surprise, but serves as a reminder of the broad exposure to potential overpayment liability.

The Final Rule adds to the list of CPT/HCPCS codes that are subject to the Stark Law as designated health services.